RDeFi was born in the summer of DeFi or will it make a comeback?

There is no doubt that NFTs will receive the most attention in the crypto space in 2021.  

While some market watchers foresaw its rise in popularity and usage not long ago, its rapid uptake among traditional and crypto-native players has surprised most of us.

The hype surrounding punks, apes, and rock eclipses even the booming DeFi industry.

However, I expect DeFi will be in the spotlight again in 2022, with a second “DeFi summer” like 2020.

There are two main reasons:

1) Yield opportunities may be more sought after, especially envisioned in a sideways or bear market.

2) and building a canonical version of DeFi, which I call RDeFi.

Attractive Earnings Opportunity

Since the “DeFi Summer” of 2020, many new and innovative projects have emerged, while established projects have further developed their products.

One trend that we’ve seen in 2021, especially in the first half, is different types of earnings generation.

Because DeFi offers very attractive yield opportunities, ranging from 3-5% for conservative products to 30-40% for more aggressive stablecoins, depending on the investor’s risk appetite.

Many new crypto entrants who entered the space during the recent bull run will start exploring DeFi.

For some, this will be the “traditional” path from Bitcoin to Ethereum to DeFi.

For others, it will be from NFTs to Ethereum, then DeFi.

No matter how you get into DeFi, the result is the same: DeFi adoption increases, which could lead to a DeFi 2.0 summer.

Avoid high gas fees

Although the ETH2.0 upgrade is scheduled for the first half of this year, I believe Ethereum will still handle very high network fees for most of the year.

This won’t stop DeFi adoption, but it will push investors to use more layer 2 scaling solutions.

Examples include Arbitrum, Polygon or Optimism, and other smart contract platforms such as Polkadot, Solana, Avalanche or Terra.

I’m very excited about Polkadot’s DeFi platform, Acala, which recently became one of the first projects to get parachain slots on Polkadot.

Also, it will be interesting to see Solana getting a large share of NFTs from Ethereum due to lower network fees.

Its high TPS and scalability allow DeFi applications that are not possible with Ethereum.

The emergence of “RDeFi”

It is believed that in 2022 we will see the emergence of RDeFi (Regulated DeFi).

This may sound contradictory to some, but I think this is the next evolution of DeFi.

I expect that in addition to the DeFi we all know and love, there will be a parallel DeFi space, with a regulated wrapper that meets traditional financial regulatory requirements.

This RDeFi can only be accessed through the same “KYC” process used by traditional investment vehicles and must meet the same anti-money laundering standards.

We’ve already seen early examples of RDeFi projects in 2021, with lending protocols Aave and Compound both offering compliant versions of their platforms, AaveArc and Compound Treasury, respectively.

This trend is likely to continue, I expect other types of DeFi projects, such as DEXs, to offer regulated versions of the platform as well, and I wouldn’t be surprised to see a UniswapPro version next year.

I would also like to see more projects that are regulatory compliant from the start, such as Swarm Markets, which received regulatory approval from German regulator BaFin earlier this year and operates as the first regulated DEX.

Additionally, I expect large exchanges like Coinbase or Kraken to provide their investors with access to DeFi applications via regulated gateways.

Since the burden of self-custody and private key management is avoided by using centralized exchanges, they can provide a DeFi platform without having to download a web wallet or interact directly with dApps.

Such products will bring further adoption and liquidity to the space.

While some crypto experts will argue that DeFi applications with KYC requirements go against the spirit of decentralized finance, I prefer to define DeFi as an owner-operator economic model rather than being provided by for-profit entities Serve.

The conditions of access to services do not change the economic model. The products offered by RDefi develop a new customer base for these platforms, with which regulated financial institutions will not be able to interact.

In addition, regulation can increase customer protection and hold platforms accountable, which may also be preferred by those who are not restricted by regulated services.

I believe this development will help the field mature. RDeFi will play a key role in further increasing the liquidity of DeFi platforms, in fact it is the only way for regulated institutions to enter the space.

write at the end

While I expect NFTs to continue to attract interest, especially given their connection to the Metaverse and blockchain-based games, I believe the DeFi space will also regain some traction. DeFi has matured over the past year, and while DeFi is still a very innovative field, the field has continued to mature over the past year. High-yield opportunities will continue to attract investors, while RDeFi will take DeFi to another level, increasing adoption and liquidity.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/rdefi-was-born-in-the-summer-of-defi-or-will-it-make-a-comeback/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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